On behalf of Powell Law Offices, P.C. posted in blog on Thursday, March 1, 2018.
Users of cryptocurrency payment systems like Bitcoin hail it as an efficient way of sending digital cash.
And while they may see it is as convenient cryptocash poses unique challenges when it comes to estate planning and has probate courts entering into unchartered territory.
What exactly happens to cryptocash when you die?
Here is why cryptocurrency systems such as Bitcoin have yet to win over some estate planning attorneys.
One father knows what happens to Bitcoins all too well after losing his son, a Bitcoin holder, five years ago.
In order to administer his son’s assets he needs to gain access to his cryptocurrency stash.
The father knew that his son was a Bitcoin holder when he passed. But even after three years he still doesn’t know how many coins his son had and if they’re even worth anything.
And he isn’t alone. Not even Bitcoin’s creators can access the decedent’s digital assets.
Why?
The way that Bitcoin operates is rather simple. Users only need a password to access the digital wallet.
But without the password it can be near impossible for anyone, let alone the account holder, to regain access to the funds. Each Bitcoin comes with a unique identifier and unless you know what each identifier of each Bitcoin is locating all of them would be impractical.
Does that mean that it is impossible to tie Bitcoins into an estate plan? Not always.
But with such a high margin of error it can be a game of risk. Any Bitcoin holders who want to incorporate their cryptocash into their estate plan may want to consult with a seasoned attorney to ensure that it is done properly.